US and technology-focused funds continued their reign as top performers in 2024, marking the third consecutive year of dominance, according to FE fundinfo, a financial data provider.
The report also highlighted strong performances in emerging markets, particularly Indian and Chinese equities, driven by political and economic catalysts. The analysis examined the top-performing funds registered for UK sales across key Investment Association (IA) categories.
The best-performing fund of 2024 was Alger Focus Equity, delivering a return of 54.43%. The top sector was IA Financials and Financial Innovation, which returned 24.28%, while the IA Technology & Technology Innovation sector also posted a robust 23.45% return. Emerging markets like India and China featured prominently, boosted by Beijing’s fiscal stimulus measures in late 2024. The top-performing fund in the Sterling Strategic Bond universe was Man Group Man Dynamic Income, which returned 19.03%.
Charles Younes, deputy chief investment officer at FE fundinfo, commented: “Recession fears loomed over 2024 as bond markets initially priced in multiple rate cuts. Yet the global economy continued to run at or above its long-term trend, defying pessimistic forecasts. Inflation remained stubbornly above target, forcing central banks to maintain restrictive policies.” Younes noted that portfolios with limited interest rate sensitivity outperformed, leveraging higher-yielding credit exposures.
US and technology-focused funds dominated the IA Global Equity category, with top performers such as Artemis Global Income I Inc delivering a 26.81% return. M&G Global Dividend I Acc GBP followed closely with a 21.11% return. The category’s performance was bolstered by momentum-factor strategies.
Younes highlighted the impact of the US political landscape, saying: “The re-election of President Trump coincided with a surge particularly of US small-cap stocks, narrowing the gap between the S&P 500 Equal Weight Index and its market-cap-weighted counterpart. This broader rally reduced reliance on mega-cap names and diversified opportunities across industries.”
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In the IA Global Emerging Markets sector, Chinese and Indian equities stood out, with Carmignac Portfolio Asia Discovery FW GBP Acc and NB Emerging Markets Equity I Acc USD delivering returns of 25.11% and 21.65%, respectively. Beijing’s fiscal stimulus in Q3 reinvigorated investor sentiment, though volatility persisted. Younes commented:
“While China’s late-year rally provided a lifeline for many funds, the region’s heightened volatility highlighted the challenges of navigating shifting policy environments and uneven economic recoveries,” added Younes.
UK equities benefited from reduced political uncertainty, according to the data. Top performers included Artemis UK Select I Acc and Artemis SmartGARP UK Equity I Acc, which returned 25.30% and 24.54%, respectively. According to researchers, the October Budget announcement spurred a rally in smaller companies, boosting market breadth.
Highlighting the appeal of technology, Younes said: “While valuations are a critical component of any investment decision, they must be considered alongside sentiment and fundamentals. The enduring appeal of US equities, particularly in technology, lies in their robust R&D, competitive advantages, and unmatched revenue and profitability prospects.”
